Best’s Special Report: Unaffiliated Offshore Reinsurance Deals Drive Asset-Intensive Reinsurance Market in 2025

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- The amount of annuity reserves ceded offshore continued to increase in 2025 and now represent more than half of ceded annuity reserves as companies manage risk-based capitalization levels amid increased market competitiveness, according to a new AM Best report.

The Best’s Special Report, “Unaffiliated Offshore Reinsurance Deals Drive Asset-Intensive Reinsurance Market in 2025,” is a part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, life/annuity, health and regional reinsurance markets, will be available during August and September.

The asset-intensive reinsurance market remains competitive as annuity growth slows at primary insurers, leading to steadily increasing reinsurance leverage for the life/annuity segment. In this report, AM Best states that offshore reinsurance accounted for nearly 56% of ceded annuity reserves, including modified coinsurance (modco) reserves. While Bermuda continues to be the dominant offshore domicile, the Cayman Islands increased their share of the market in 2025, heavily driven by a few recently established sidecars. The dramatic increase in ceded reserves to offshore affiliates has been driven largely by private equity/asset manager-owned companies.

“Private equity/asset manager-owned insurers generally lean more into this strategy, as these companies account for nearly half of reserves ceded to offshore affiliates, but account for only one-quarter of total reserves ceded,” said Jason Hopper, associate director, Industry Research and Analytics, AM Best.

Other report takeaways include:

Unaffiliated reinsurance deals outpaced affiliated deals in 2025 for the first time in three years, with the 10 largest unaffiliated reinsurance transactions in 2025 totaling over $107 billion, greatly surpassing the $35 billion in 2024.
AM Best notes that cross-border reinsurance introduces operational complexity and opacity. While the use of offshore reinsurance helps manage risk-based capitalization, reinsurance dependence, quality and the appropriateness of reinsurance programs can have negative impacts to the overall balance sheet strength assessment in AM Best’s rating analysis.
Although reinsurance deals with offshore entities often complicate accounting, AM Best captures these risks at the consolidated level by looking at the ceding and affiliated captive reinsurance company in its global Best’s Capital Adequacy Ratio (BCAR) calculations.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=367578.

A video discussion of this report with Hopper is available at http://www.ambest.com/v.asp?v=amblaoffshoregr826.

For global reinsurance reports ahead of Rendez-Vous de Septembre, as well as video coverage of the event, please visit AM Best’s Reinsurance Information center.

Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 6, 2026, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit the event website.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.